A federal court in New York sided
with eBay in a lawsuit with upscale jeweler Tiffany & Co. Monday,
mandating that eBay sellers can continue to peddle designer jewelry without the
site policing listings for counterfeit items.

According to U.S. District Judge Richard Sullivan’s 66-page
ruling (PDF), eBay’s current efforts at enforcement – which primarily
involves responding to takedown requests from copyright and trademark holders –
are more than sufficient to keep the site out of liability for inadvertently
brokering counterfeit goods.

“It is the trademark owner's burden to police its mark and companies like
eBay cannot be held liable for trademark infringement based solely on their
generalized knowledge that trademark infringement might be occurring on their
websites,” wrote Sullivan.

Filed in 2004, Tiffany’s lawsuit accused eBay of ignoring the sale of
counterfeit Tiffany jewelry on its auction site. The suit also alleges
trademark infringement due to the sellers’ use of the Tiffany name in product
listings, and asks the New York federal court to force eBay to be more
proactive in policing its listings for fake goods.

The lawsuit attracted a wide range of spectators, and legal analysts say the
suit has important implications for nearly any industry affected by piracy and
copyright or trademark infringement. A victory for Tiffany would have set
precedent that named content and platform providers – a description that fits a
wide variety of names, including eBay and video-sharing site YouTube – as
primary enforcers in other companies’ trademarks.

Instead, the judge noted, eBay has a team of 200 employees dedicated to
rooting out counterfeit listings, and another 70 that liaise with law
enforcement. Further, noted Sullivan, eBay’s automated enforcement software is
so aggressive that it’s crashed the site’s computer systems on numerous
occasions. Tiffany, on the other hand, spent substantially less time developing
its arguments, which include a commissioned survey of goods that Sullivan found
to be “flawed” and a paralegal hired to patrol the site for two days a week.

Similar claims, made by media giant Viacom against video-sharing site
YouTube, are
also working their way through a New York federal court. Some analysts
speculate that the Tiffany v. eBay decision could affect that case,
however little appears to have happened since Google was ordered to give
complete usage logs to Viacom earlier this month.

Sullivan’s decision stands in stark contrast to a similar ruling entered
against eBay in France, where the Commercial Court of Paris recently sided
with Louis Vitton and ordered the auction site to block sales of all Louis
Vitton products – counterfeit or not – offered by unauthorized distributors.

It is expected that Tiffany will attempt to appeal the decision.

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